This means that we're affected as much by our failures as we are by our successes. And that's important to embrace and understand as it relates to being an entrepreneur. But not only on an individual level but what it means to the communities that you live in. On this episode of "Top of Mind" we're talking about the importance of failure and what it means to the communities and the individuals that are trying to succeed. I'm Thom Ruhe. And this is "Top of Mind."

>> At the Kauffman Foundation we've been studying entrepreneurship for years. And obviously we're really interested to understand what are the factors, the conditions, the policies, the ecosystem, the community aspects that help entrepreneurs succeed. But you really can't study entrepreneurship in the vacuum of success. The other half of that equation is really what happens in failure. And the things that entrepreneurs can take away from failure is almost as important as having the right plan to figure out how you're going to succeed.

It's for that reason we hosted the first ever "Fail Night" here in Kauffman Labs to give the community an opportunity to be heard, to come and share their failed experiences, to elevate the appreciation that failure really is the way that we become stronger. And it has almost as much to contribute to the ultimate success of an entrepreneur as the successes that they have with their own endeavors.

>> That, that experience, left me rather wounded in all kinds of different ways.

>> I know for my part, and I think about my entrepreneurial endeavors that I've done over the years, some of my failures were the areas where I learned the most, that served me the greatest later in life. So you know, it's not easy to talk about failure. You know, for a lot of people that's a source of personal shame. And it's understandable why it might be.

So I kicked off the event by sharing one of my own failures. And one of the things that I really wanted the audience to understand is sometimes being in a failure isn't as obvious as you might think. You know, in the classical sense we think of that as the company can't make profit, or, you know, you failed to develop a product according to the specifications of, you know, your clients. But sometimes it's just life choices that gets you in circumstances and situations that's nearly impossible to dig out from. And it's important along the way to recognize when you might be in a fail situation.

>> But he invited me, you know, based upon our friendship he said, hey, come start your company here, you know, no strings attached. Free rent. You know, it's all going to be great. Told my wife, going to do it again, don't worry. She said wow, I'm worried. I said no, don't worry, they'll be great. I'm going to tap into the whole business network that Dick has and other groups that I can touch and we'll make this happen. And what ended up happening is I became an unofficial partner to a failing business. So you know, what made sense from a cash flow standpoint, you know, don't pay rent, right? I got a free space. And his receptionist took care of my calls too. And I could schedule the occasional meeting. That came at such a high expense. And the expense wasn't dollars and cents, it was my intellectual cycles. Because instead of working on my business I was working on Dick's business. And that business was failing. And it was obvious to me. And it hurt me to see it happening because he didn't know any other way of thinking. You know, so what I found myself is spending hours upon hours talking to him about the business model, saying we should pivot, we should do something different. And it was only by accident that I even recognized that I was using the verbiage, the vernacular of "we" should do something different. Because subconsciously I had become a part of the company and of course I wasn't. And the expense of that was my own business.

>> As the evening went on the audience got to hear a variety of fail stories which really showed the panacea of things that can trip up entrepreneurs along the way. It also let them know that they're not alone. Failure is inevitable. If you're going to be out there doing it with any kind of volume or intensity, you will fail. What's important is how you recover from those failures, what you take away from that experience that will make you stronger the next time you try it.

>> What happens when you have a company that does not have software development as a core competency is that you end up using people, wrong people in the wrong job. So for example, I had graphic designers doing QA. Because the developers would send it to us and we'd have to say we have to test this on all the different platforms and all the different things. Hey, I know you already have a job, but can you just test this real quick. Well gosh, I have to plug in the camera and maybe all the drivers aren't there. So what turns real quick, turns into five hours and that person lost the entire productivity for the day. And eventually my operations guy's like, dude, you're killing me with this thing. So guess who ended up doing it? (Indicating.) And I'm the CEO of the company. Is that what I should be doing right then? No.

>> And so then I started talking to them and doing some customer development as you would call it now. And I realize there's an idea here of allowing Generation Y to be able to shop at all of these different internet sites and save the items in one list that they can share with their friends and save for later. And so I said that's a pretty good idea. And I can do that. And so at that point I was in Kansas City and felt it was time to move to Silicon Valley. So I got a U‑Haul, packed it up, went out to Silicon Valley and knew nobody. But found a team, recruited a team, had some office, and we built the product and we started doing it. And the product was actually pretty cool and it worked really well. And I had a good team so I was very lucky on that. But we weren't seeing the hockey growth traffic you needed for a site that was consumer‑oriented with not a large revenue stream. We got product sold but not a huge revenue stream realizing we were not getting the traffic. And at that time I realized I needed to pivot one more time when I started seeing our traffic leave and then those users be on what you now see as Pinterest. So at the time we're kind of doing the same thing. And they started leaving my site to go to Pinterest. And once that started happening, Pinterest started getting the hockey growth and we started losing users, I say okay, we're not going to make this thing happen.

>> By sharing these stories in a public forum, in an open forum if you will as we did here, it really helps the community understand that failure is part of the journey as it is in life. And it really does a great deal to take away the stigma of failure. That it's not the end of the world and it's not somehow a mark against who you are, the integrity, or your intelligence. It's just part of the natural process of starting and growing companies.

>> Started the summer of 2011. By April of 2012 we realized that usage wasn't there. Attorneys started asking us, hey, where are all my leads. And we didn't have an answer for them because we thought we were going to get all this traffic to the site. And so our assumptions that we had were incorrect. One, consumers use it. Two, that leads would be drawn to attorneys from it. And three, that attorneys would have control of the marketing budgets and would see this as a great lead source for them. We had an amazing team of seven people. We had to lay them off. We presented at 1 Million Cups as a pretty early presenter, just talking about, hey, we're going to pivot to National Lawyer Review which was going to be our next fledgeling idea. And ultimately decided to just shut it down and to not try to put more money after, good money after bad.

>> You know, it's always intimidating talking about your own failure. And it's very vulnerable. For my partner and I it was an opportunity. We've done this before. We had to talk about it before. And we grew a lot from it. The chance to talk about it again still brings up some of those old wounds of like, man, like we had this going. Or, man, we had to layoff seven people. Never a fun topic. It's always hard. And until you're in that situation you never understand it. But also never hearing other people talk about it becomes almost a shameful thing. Getting past that guilt and shame does tremendous value for your soul and hopefully for your community as well.

>> So if there's a big thought I would want you, the viewer, to take away from this edition of "Top of Mind" is this, I don't know any very successful entrepreneur that hasn't had multiple failures along the journey. It's a natural part of the process. And you only fail if you fail to get up, dust yourself off and start again. Within the communities that seek to serve and support the entrepreneurial ecosystem, those communities have to likewise embrace this notion that failure's inevitable. Don't condemn the person for it. Rather, embrace them and help them get back on their feet sooner rather than later.

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